Housing Boom Puts Bang in the Sales of Home Furnishings
The housing sales boom, coupled with the primal need to fill a new home with new stuff, has boosted sales of everything from armchairs to armoires and has the home furnishings industry calling 1998 a banner year.
The revved-up home sales market continued to flourish in the San Fernando Valley in July, with a Realtors’ group Monday reporting a fifth straight monthly increase in the sale of single-family houses. In July of last year, 1,111 single-family homes were sold in the Valley, compared with 1,316 last month, for a gain of 18.5%.
While that’s only one house greater than the tally for June of this year, it was the highest July figure since 1988, when nearly 1,500 single-family houses changed hands in the Valley, according to the Southland Regional Assn. of Realtors, which tracks sales of existing homes.
In the Santa Clarita Valley, single-family home sales rose a stunning 61% over July 1997 levels--to 313 homes.
With each new homeowner comes a host of new-home needs, from pine furniture to PineSol, and a multiplier effect that economists say will reap dividends for the retail and service sectors this year and for years to come.
“This will be the best year ever in terms of the dollar volume of sales,” said Joseph P. Logan, director of finance and economic research at the American Furniture Manufacturer’s Assn., representing a $147-billion industry that is one of the chief beneficiaries of the nationwide housing boom.
“It has been a banner year. In terms of sales volume, this is an all-time high.”
Chris Maynard, manager at Ikea’s flagship store in the Burbank Media Center, said he expects more than 1.5 million visitors this year at his store, a substantial increase from last year.
“We’re doing much better this year than last year,” said Maynard, who oversees operations at the chain’s highest-producing California store. “I would say the growth we have had this year is twice the [rate of] growth we were having last year.
“When the housing market is strong, we always have a lot more traffic,” he added. “The amount of traffic we’re having in the store so far is incredible.”
Even without a crystal ball, Bud Mauro, president of the Realtors trade group, could have predicted the boon to related industries.
“Whenever housing sales are up, when they’re strong, everyone else benefits,” said Mauro, whose group put July condo sales in the Valley at 315 units, up nearly 7% from July of 1997.
“We’re the engine that drives the market and I think it’s going to go on for some time.”
Jack Kyser, chief economist with the Los Angeles Economic Development Corp. described home buying as an economic activity with “legs” and a significant trickle-down factor.
“When you buy furniture, a lot of it is made locally and that is a high multiplier,” Kyser said. “The manufacturer has to buy the wood, the fittings, the fabric. So it does have long legs.
“For anybody who sells household goods, this is like manna from heaven.”
Researchers of the Joint Center for Housing Studies at Harvard identified five industries that benefit most from a strong housing market, starting with home furnishings.
Furniture sales figures for the first half of 1998 for Los Angeles County won’t be available until next spring, said David Hayes, research manager with the State Board of Equalization. But Hayes said that given the rebound in housing construction, he expects 1998 sales to be substantially stronger than 1997 postings. For the first half of last year, the county saw $701 million in furniture sales, more than any other county in the state.
But a buoyed bottom line is not limited to furniture marts.
Also high on the new homeowner’s must-have list are appliances--which posted sales of $444 million in Los Angeles County for the first half of 1997--audio and video equipment, lawn and garden supplies and cleaning products, said Harvard’s Kermit Baker.
Barr Sarkissian, president of Sarkissian’s Carpet One store in Woodland Hills, said 1998 is shaping up to be the best year at his store in at least five years.
“We’ve had more and more foot traffic,” said Sarkissian, who heads the 50-year-old firm. “Our volume is up by about 25%.”
He, too, attributed much of the increase to the booming real estate market.
Amy Friend, spokeswoman for The Home Depot chain at its Western Region headquarters in Orange, said the 52 Southland Home Depot stores have traditionally been among the chain’s strongest. The housing boom, she said, has just bumped that up a notch.
“Some of the decor areas, such as flooring and paint, have been very strong for us and, especially in some areas, have been even stronger because of the housing boom.”
Kyser pointed out that many new homeowners, strapped for cash after shelling out big bucks to cover closing costs, delay major home furnishing purchases for months, or even years.
So a home sold today will mean sales in related industries for up to two years. Even though the biggest impact is seen in the first year and half, it doesn’t end there, he said.
“You do one thing and that starts to make something else look a little shabby,” Kyser said, generating yet more spruce-up spending.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Still Rising
The red-hot home sales market continued apace in the Valley in July, with single-family home sales posting an 18.5% increase over July 1997.
July, 1997: 1,111
July, 1998: 1,316
Source: Southland Regional Assn. of Realtors
